Black Swan to save Poseidon $240m

Poseidon Nickel has said the purchase of the Black Swan mine from Norilsk Nickel would save the company $240 million in start up-costs.

Poseidon agreed to buy Black Swan in order to access the nickel flotation concentrator on the site so it could transport ore from its flagship Mt Windarra and process it there, rather than build a new facility on site. 

An engineering study concluded that transporting the ore from Windarra to Black Swan would be the more cost efficient option.

The Black Swan concentrator expansion was commissioned in 2006 but only operated until February 2009, when it was put on care and maintenance as commodity prices fell in the wake of the GFC. 

“The concentrator is in good condition with an independently estimated restart capital cost of circa &9.4 million,” the company said in a statement. 

“In addition to the plant the site includes a large, low-grade, high-volume, open-pit nickel sulphide ore body which can be used to supplement higher grade ore from the Mt Windarra mine.”

Poseidon managing director David Singleton said the independent analysis indicated a doubling of the ore resources of the company, while shaving a year off the development time. 

“The acquisition has now given us two clear strategic alternatives to either process Mt Windarra ore through Black Swan or to deliver Windarra into an ore tolling agreement and operate Black Swan in its own right,” he said. 

The company said it was also advancing discussions with parties regarding debt financing for the project and securing an off-take contract for the Black Swan concentrate.

Poseidon’s share price lifted on the news, up 12.5 per cent to 18 cents per share at 1:25pm.